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03/12/19

Past Issues

The business of fitness and wellness.

“Cult” Is The Highest Compliment

 

Sometimes, a brand’s loyal customer base is compared to an obsessive cult. Sure, most of the time it’s just hype, and other times it’s in jest, but in the rare instance that a brand actually achieves a cult-like following, there’s no higher compliment that can be paid. And as it relates to fitness and wellness companies seeking to compete in an increasingly crowded space, it might be the holy grail.

“The key is customer love. The emergence of a close-knit community early on is something that we look at very closely.” 
— Frederic Court, Felix Capital

Love it or hate it, Goop has built a successful, venture-backed business bolstered by an obsessive community. Early on when Felix Capital founder Frederic Court was weighing an investment into Goop, he viewed the company’s community as an early indicator of their potential. Court’s assessment and subsequent investment have proven to be solid; Goop is now worth some $250M.

However, this wellness empire wouldn’t have panned out if not for its fiercely loyal following. As controversy ensued, the community dug in its heels. Instead of trying to be everything to everyone, Goop maintained its perspective and launched new verticals—products, events, retail shops—tailor-made for its core audience. In that way, they’re everything to everyone who gets them — which is exactly how a cult-community is built.

“Saying [SoulCycle’s] customer base is a cult may just be another way of saying the company has a sustainable competitive advantage in the form of deep customer loyalty.” — NYT

At SoulCycle, cult is code for competitive advantage. And in the case of this boutique cycling studio, that advantage is the ability to deliver a path to self-improvement. While bystanders see stationary bikes and spandex, devotees bask in a transcendent experience they can’t find at other gyms. A focus on personal growth and an obsession over making every class a “mini-production” have proven to be the cult-creating “it” factor for a fitness concept that now enjoys the benefit of being a household name.

Remaining true to this value proposition has served SoulCycle well in good times and in bad. After coming up short on an IPO run, while also having to fend off Peloton, SoulCycle launched a media and events division to give its passionate community more of what it wants: the SoulCycle experience. And while they’re not out of the woods yet, it’s apparent they have fared better than competitors like Flywheel, who lost sight of what made their brand, experience, and community truly great.

“I’m not sure how beauty brands arrived at what products to make. For us, there’s really only one logical conclusion, which is: talk to people.“
— Emily Weiss, Glossier Founder & CEO 

For Glossier, developing a direct relationship with customers was the differentiating factor that helped build their cult-like following. From blog to brand to a business that’s expected to do $130M in revenue this year, founder Emily Weiss set out to create the kind of products women actually wanted. And here’s the key: Weiss knew because she asked them. Through a relentless focus on the customer relationship, Glossier has made its customers a partner in product development, sales, content creation, and more — all but guaranteeing their success.  

Across these examples, it’s clear that building a cult-like following is a direct result of an unrelenting focus on community engagement and customer experience. They’re also the exact attributes that have vaulted Equinox, Peloton, Sweetgreen, and other hugely successful companies to the front of the pack. 

More than a nice-to-have, though, fostering community and creating an exceptional experience is essential for fitness and wellness companies selling an aspirational lifestyle or a luxury product. Appealing to a core customer while also convincing newcomers to exercise, eat well, or pay extra for a premium product doesn’t just happen, it’s engineered. And for the best of the best, it’s an absolute obsession. 

While others pay lip service to community and experience, the companies and founders who truly obsess over it end up building fiercely loyal followings worthy of the “cult” classification.

Headlines & Happenings

📈 The Bar Boom 

Back in Issue No. 6, we looked at the billion-dollar business of nutrition bars. Valued at more than $5B globally, the category shows no signs of slowing down. Recently, the subject has popped up again, with coverage on both Vox and Outside Magazine

"In terms of growth, bars are unparalleled. It’s the fastest-growing segment in the grocery store.” 
— Keith Neumann, Clif Bar’s former senior vice president of brand marketing 

And in related news, RXBAR is preparing for its second act. Roughly 18 months after selling to Kellogg’s for $600M—and following a round of layoffs, lawsuits, and international expansion—the company is rebranding. Under its new name, Insurgent Brands, they’ll expand their product offerings under RXBAR—like nut butter and oatmeal—and launch a new sub-brand, TIG. Under the TIG umbrella, expect to see savory and crunchy bars that are more casual than the performance-oriented RX line.

⚡ Shock Therapy

A new kind of wearable is gaining steam. No, it’s not another performance-tracking wristband. We’re talking about headbands used to administer transcranial direct current stimulation (tDCS). Yes, that’s mild electrical shocks targeted at specific regions of the brain. Why? The thought is that, because the brain runs on electricity, zapping it while practicing, say, an athletic movement will help us learn or perfect the motion. As Daniel Chao, founder of the tDCS headset Halo put it, products like his boost muscle memory.

So, do they work? Kinda. A May 2017 study found that “tDCS harbors the potential to enhance executive and physical human performance.” But, the researchers wrote, “it remains to be conclusively determined whether it can improve sports performance at an elite level.”

For now, tDCS seems to fit into a growing category of fitness and wellness products that we think work, or at least we believe do. Ultimately, that belief might be the benefit in itself.

🥊 Ready to Rumble

Last fall, Rumble and Technogym announced At Home 360, a partnership that pairs the studio’s trainers and programming with the manufacturer's luxe equipment. In the time since, Rumble has been hard at work opening new boxing studios while laying the groundwork for their all-new Rumble Treading boutique running concept. The emergence of Treading also ties into the Technogym partnership — the at-home content will go beyond boxing to include running, cycling, cross-training, and more. And from the look of things, the at-home program seems to be coming together. Last week, Rumble co-founder Eugene Remm shared a behind the scenes peek on Instagram. 

But, the company’s success isn’t free from controversy. As Rumble hits the fundraising trail in hopes of landing $200M in capital, Andrew Stenzler, one of the company’s co-founders, is being sued. According to a report from Bloomberg, two men are alleging that Stenzler stole their idea for a boxing studio called Spar and are seeking $28M in damages. Stenzler, who contends the men are just out to capitalize on Rumble’s success, is seeking to have the case dismissed. Stay tuned for updates.

📸 ICYMI

A few weeks back, we surveyed a group of subscribers to see if there was any interest in a Fitt Insider Instagram account. The answer was a resounding yes. Now, you can follow us here for more coverage of the business of fitness and wellness.

💰 Money Moves

 

US companies fighting food waste attracted $125M in venture capital and private equity funding in the first 10 months of 2018 — a number that’s expected to rise as food- and agri-tech solutions continue to gain traction.

Daxko, a membership platform for health and wellness facilities, acquired GroupEx PRO, a group exercise management portal.

Foot Locker has made a $15M strategic investment into high-fashion activewear brand Carbon38

Hammerhead, a startup building navigation and training software for cyclists, has raised a seed round of $4.2M led by Primary Venture Partners, with participation from Courtside Ventures, Maveron, Drummond Road Capital, MapMyFitness co-founder Robin Thurston, and Zipp CEO Andy Ording.

teaRIOT, a fast-growing natural energy tea brand, closed its Series A funding round of more than $3M.

Kraft Heinz announced its next incubator class of five food startups—including Blake’s Seed Based, BRAMI Snacks, Ka-Pop! Snacks by Ancient inGRAINed Snack Co., Origin Almond, and Tiny Giants—who will receive $50,000 each with the opportunity to earn another $50,000 as part of the program.

Spill, a UK-based workplace app that provides access to mental health and well-being services via text messaging, raised $850K in seed funding.

NutriCern, the creator of the EatRx prescriptive nutrition platform, closed a $1M seed funding round.

Mondelēz International bought a minority stake in Uplift Food, a producer of prebiotic functional food supplements. This is the first investment made by Mondelēz’s SnackFutures innovation and venture hub.

quip, a dental care startup, raised $40M in funding to launch new product and professional care services.

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Get in Touch

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